2022-001 - Deficient Federal Procurement Policies and Procedures Finding Type: Material Weakness and Noncompliance over Federal Awards Programs: Capitalization Grants for Clean Water Revolving Funds (Assistance Listing Number 66.458) Criteria: Per 2 CFR Part 200.318 and 319 General Procurement Standards and Competition, the City must: ? Maintain written standards of conduct covering conflicts of interest ? Avoid acquisition of unnecessary or duplicative items ? Promote cost-effective use of share services ? Use value engineering clauses in contracts for construction projects to offer reasonable opportunities for cost reductions ? Award contracts only to responsible contractors ? Maintain records sufficient to detail the history of procurement, including (but not limited to) rationale for the method of procurement, selection of the contract type, selection of the contractor, and basis for the contract price ? Procurements provide for full and open competition Condition/Finding: The City was found to have inadequate controls over procurement during our testing. The lack of controls led to noncompliance over federal procurement standards because the City was unable to provide documentation demonstrating their rationale for contractor selection, selection of the contract type, basis for the contract price, or how full and open competition was achieved. Cause: The City did not have policies and procedures over procurement as required by the Uniform Guidance. Effect: The City has increased risk of entering into unfavorable contracts and/or participating inadvertently in ineligible related party transactions without following effective policies. Questioned Costs: No questioned costs were identified as a result of this finding. Repeat Finding: No Recommendation: We recommend that the City Commission and management adopt, and follow, written policies and procedures (that conform with requirements of the Uniform Guidance) to ensure that future contracts are properly documented and awarded in a manner that demonstrates the rationale applied in awarding a contract to the most economical bidder within an appropriately competitive environment. View of Responsible Officials (Corrective Action): See corrective action plan.
2022-002 - Deficient Federal Cost Principles Policies and Procedures Finding Type: Material Weakness and Noncompliance over Federal Awards Programs: Capitalization Grants for Clean Water Revolving Funds (Assistance Listing Number 66.458) Criteria: Per 2 CFR Subpart E - Cost Principles, ? 200.400 Policy guide: The application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. Condition/Finding: We examined $1,746,599 of federal funds reimbursed to the City from the State Revolving Fund award during the year. Management informed us and we verified that $134,102 of reimbursements were for ineligible construction costs as these amounts were bid alternates that were not allowed uses of the federal award. Further, management informed us and we verified that $17,253 of federal reimbursements were received for a duplicate construction invoice. Further, as a result of reviewing the ineligible costs, management found that in fiscal year 2021, ALN 66.458 included $5,768 in ineligible expenditures, and the overall total expenditures was understated by $184,073. In addition, ALN 14.228 had expenditures of $229,554 that were understated in fiscal year 2021, and ALN 10.760 had expenditures totaling $81,228 that were understated in fiscal year 2021. Cause: The City did not have written policies and procedures over cost principles as required by the Uniform Guidance. Further, the informal policies and procedures that were followed by the City were not effectively designed. The ineffective design allowed an individual to prepare and submit reimbursement requests for federal funds without appropriate review in place to prevent and detect reimbursement reporting and submission errors. Effect: The City?s controls over cost principles were found to be ineffective. Additionally, the City was noncompliant with cost principal requirements and received reimbursements of $151,355 that were subsequently found (by new management) to be ineligible. Questioned Costs: $151,355 costs have been questioned as a result of this finding. Repeat Finding: No Recommendation: We recommend that the City Commission and management adopt, and follow, written policies and procedures (that conform with requirements of the Uniform Guidance) to ensure that future grant and/or loan reimbursements are properly reported, documented, and reviewed by individuals with appropriate knowledge of the award to prevent ineligible costs from being received by the City. View of Responsible Officials (Corrective Action): See corrective action plan.
2022-003 - Written Policies Required by the Uniform Grant Guidance Finding Type: Material Weakness over Federal Awards Programs: Capitalization Grants for Clean Water Revolving Funds (Assistance Listing Number 66.458) Criteria: Per 2 CFR ? 200.214 Suspension and debarment: Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition/Finding: The City had no controls in place, as required by the Uniform Guidance, to ensure that all parties that the City enters into covered transactions with are eligible for participation in federal assistance programs or activities. However, during our testing, we found that all covered transactions entered into by the City were with eligible parties. Cause: The City did not have written policies and procedures over procurement, including suspension and debarment, as required by the Uniform Guidance. Effect: As a result of this condition, the City had increased risk of inadvertently entering into a covered transaction with an ineligible party. Questioned Costs: No costs have been questioned as a result of this finding. Repeat Finding: No Recommendation: We recommend that the City Commission and management adopt, and follow, written policies and procedures (that conform with requirements of the Uniform Guidance) to ensure that future contracts are properly documented and awarded in a manner that documents that the City verified all parties under covered transactions are eligible for participation in federal programs or activities. View of Responsible Officials (Corrective Action): See corrective action plan.
2022-004 - Written Policies Required by the Uniform Grant Guidance Finding Type: Material Noncompliance Programs: Capitalization Grants for Clean Water Revolving Funds (Assistance Listing Number 66.458) Criteria: The Uniform Guidance requires a non-federal entity that has expended federal awards for a grant awarded on or after December 26, 2014, to have written policies pertaining to allowability of costs charged to federal programs, controlled activities over allowable costs and allowable activities, cash management, financial management, compensation/payroll, and relocation cost of employees (?200.300 - 328)). Condition/Finding: Although the City has processes in place to cover these areas, the City lacks formal written policies covering these areas. Cause: This condition appears to be the result of a time lag in identifying the requirement and developing a plan for compliance. Effect: As a result of this condition, the City did not fully comply with the Uniform Guidance applicable to the above noted grants. Questioned Costs: No costs have been questioned as a result of this finding. Repeat Finding: No Recommendation: We recommend that the City ensures these policies are updated to conform with the Uniform Guidance as soon as practical, but no later than the end of fiscal year 2023. View of Responsible Officials (Corrective Action): See corrective action plan.
2022-001 - Deficient Federal Procurement Policies and Procedures Finding Type: Material Weakness and Noncompliance over Federal Awards Programs: Capitalization Grants for Clean Water Revolving Funds (Assistance Listing Number 66.458) Criteria: Per 2 CFR Part 200.318 and 319 General Procurement Standards and Competition, the City must: ? Maintain written standards of conduct covering conflicts of interest ? Avoid acquisition of unnecessary or duplicative items ? Promote cost-effective use of share services ? Use value engineering clauses in contracts for construction projects to offer reasonable opportunities for cost reductions ? Award contracts only to responsible contractors ? Maintain records sufficient to detail the history of procurement, including (but not limited to) rationale for the method of procurement, selection of the contract type, selection of the contractor, and basis for the contract price ? Procurements provide for full and open competition Condition/Finding: The City was found to have inadequate controls over procurement during our testing. The lack of controls led to noncompliance over federal procurement standards because the City was unable to provide documentation demonstrating their rationale for contractor selection, selection of the contract type, basis for the contract price, or how full and open competition was achieved. Cause: The City did not have policies and procedures over procurement as required by the Uniform Guidance. Effect: The City has increased risk of entering into unfavorable contracts and/or participating inadvertently in ineligible related party transactions without following effective policies. Questioned Costs: No questioned costs were identified as a result of this finding. Repeat Finding: No Recommendation: We recommend that the City Commission and management adopt, and follow, written policies and procedures (that conform with requirements of the Uniform Guidance) to ensure that future contracts are properly documented and awarded in a manner that demonstrates the rationale applied in awarding a contract to the most economical bidder within an appropriately competitive environment. View of Responsible Officials (Corrective Action): See corrective action plan.
2022-002 - Deficient Federal Cost Principles Policies and Procedures Finding Type: Material Weakness and Noncompliance over Federal Awards Programs: Capitalization Grants for Clean Water Revolving Funds (Assistance Listing Number 66.458) Criteria: Per 2 CFR Subpart E - Cost Principles, ? 200.400 Policy guide: The application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. Condition/Finding: We examined $1,746,599 of federal funds reimbursed to the City from the State Revolving Fund award during the year. Management informed us and we verified that $134,102 of reimbursements were for ineligible construction costs as these amounts were bid alternates that were not allowed uses of the federal award. Further, management informed us and we verified that $17,253 of federal reimbursements were received for a duplicate construction invoice. Further, as a result of reviewing the ineligible costs, management found that in fiscal year 2021, ALN 66.458 included $5,768 in ineligible expenditures, and the overall total expenditures was understated by $184,073. In addition, ALN 14.228 had expenditures of $229,554 that were understated in fiscal year 2021, and ALN 10.760 had expenditures totaling $81,228 that were understated in fiscal year 2021. Cause: The City did not have written policies and procedures over cost principles as required by the Uniform Guidance. Further, the informal policies and procedures that were followed by the City were not effectively designed. The ineffective design allowed an individual to prepare and submit reimbursement requests for federal funds without appropriate review in place to prevent and detect reimbursement reporting and submission errors. Effect: The City?s controls over cost principles were found to be ineffective. Additionally, the City was noncompliant with cost principal requirements and received reimbursements of $151,355 that were subsequently found (by new management) to be ineligible. Questioned Costs: $151,355 costs have been questioned as a result of this finding. Repeat Finding: No Recommendation: We recommend that the City Commission and management adopt, and follow, written policies and procedures (that conform with requirements of the Uniform Guidance) to ensure that future grant and/or loan reimbursements are properly reported, documented, and reviewed by individuals with appropriate knowledge of the award to prevent ineligible costs from being received by the City. View of Responsible Officials (Corrective Action): See corrective action plan.
2022-003 - Written Policies Required by the Uniform Grant Guidance Finding Type: Material Weakness over Federal Awards Programs: Capitalization Grants for Clean Water Revolving Funds (Assistance Listing Number 66.458) Criteria: Per 2 CFR ? 200.214 Suspension and debarment: Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition/Finding: The City had no controls in place, as required by the Uniform Guidance, to ensure that all parties that the City enters into covered transactions with are eligible for participation in federal assistance programs or activities. However, during our testing, we found that all covered transactions entered into by the City were with eligible parties. Cause: The City did not have written policies and procedures over procurement, including suspension and debarment, as required by the Uniform Guidance. Effect: As a result of this condition, the City had increased risk of inadvertently entering into a covered transaction with an ineligible party. Questioned Costs: No costs have been questioned as a result of this finding. Repeat Finding: No Recommendation: We recommend that the City Commission and management adopt, and follow, written policies and procedures (that conform with requirements of the Uniform Guidance) to ensure that future contracts are properly documented and awarded in a manner that documents that the City verified all parties under covered transactions are eligible for participation in federal programs or activities. View of Responsible Officials (Corrective Action): See corrective action plan.
2022-004 - Written Policies Required by the Uniform Grant Guidance Finding Type: Material Noncompliance Programs: Capitalization Grants for Clean Water Revolving Funds (Assistance Listing Number 66.458) Criteria: The Uniform Guidance requires a non-federal entity that has expended federal awards for a grant awarded on or after December 26, 2014, to have written policies pertaining to allowability of costs charged to federal programs, controlled activities over allowable costs and allowable activities, cash management, financial management, compensation/payroll, and relocation cost of employees (?200.300 - 328)). Condition/Finding: Although the City has processes in place to cover these areas, the City lacks formal written policies covering these areas. Cause: This condition appears to be the result of a time lag in identifying the requirement and developing a plan for compliance. Effect: As a result of this condition, the City did not fully comply with the Uniform Guidance applicable to the above noted grants. Questioned Costs: No costs have been questioned as a result of this finding. Repeat Finding: No Recommendation: We recommend that the City ensures these policies are updated to conform with the Uniform Guidance as soon as practical, but no later than the end of fiscal year 2023. View of Responsible Officials (Corrective Action): See corrective action plan.